Officials in New Zealand have arrested and charged the captain of the stricken cargo ship Rena, which is leaking oil in what is now the country's worst maritime environmental disaster.

The Liberian-flagged ship ran aground off the coast of Tauranga on the North Island a week ago, and pollution is expected to worsen after the crew was evacuated amid heavy seas yesterday.

The captain of the ship has been arrested under the Maritime Act, charged with operating a vessel in a manner causing unnecessary danger or risk, and has appeared in court.

The 44-year-old Filipino, whose name has been suppressed, faces an $8,000 fine or a maximum 12 month's jail.

He did not enter a plea and faces a further hearing on October 19.

Maritime New Zealand (MNZ) says as much as 350 tonnes of oil has already escaped and some has washed up on local beaches around the pristine Bay of Plenty.

The navy estimates 70 containers have fallen off the ship and there are fears that cargo containing ferro-silicon - which is hazardous and flammable when mixed with water - may have fallen off as well.

It is highly likely that more containers will come off the ship because of the severe weather conditions and the vessel's heavy list, MNZ said.

"There are 1,368 containers on board. Eleven containers containing hazardous substances are still on the vessel and are not among the 70 estimated overboard," an MNZ statement said, adding major shipping had been re-routed.

Environment minister Nick Smith says the situation "will turn out to be New Zealand's worst ever oil spill" and says it is a "very tragic and saddening situation".

"It is my view that the tragic events we are seeing unfolding were absolutely inevitable from the point that the Rena ran onto the reef in the early hours of Wednesday morning," he said.

Transport Minister Steven Joyce said the overboard containers posed a serious risk to shipping in the area.

"The ship rammed itself hard onto the reef and there's been a lot of movement in the ship," he said.

"It's gone from a list on one side of about 11 degrees, to the other side to 15 degrees.

"As I understand it from observation this morning it's still in one piece. But obviously they're very concerned as to further damage below the water line which you obviously can't see from the air or from the ships that are standing off."

Greenpeace New Zealand campaign manager Steve Abel said there were also fears for endangered blue whales which are known to calf in the area.

"There was a calving blue whale sighted in the area only a week before the Rena ran aground," he said.

"There are numerous dolphins that live in the Bay and they're calving at this time of the year. All of the marine ecology is at risk from the impacts of this oil and the responses to it, some of which involve use of dispersant."

Greenpeace has called on authorities to stop using the dispersant Corexit 9500. And locals at a community meeting last night heckled the environment minister, calling out that it is banned overseas.

They also questioned why the government is not using booms to clean up the oil slick.